Saudi import ban deals another blow to reeling Lebanese industry
Send a link to a friend
[November 05, 2021] By
Timour Azhari
BEIRUT (Reuters) - At Oriental Paper
Products, a stationery factory outside Beirut, machinery sits idle and
shifts have been reduced. The firm was already struggling amid Lebanon's
financial crisis; a full-blown diplomatic row with Saudi Arabia has made
matters worse.
Last week Riyadh extended a blockade on some goods from Lebanon to a
blanket ban, in response to criticism by a Lebanese minister of Saudi
Arabia's role in the civil war in Yemen.
The comments exacerbated deteriorating relations between the former
allies, with Riyadh increasingly critical of what it says is arch-enemy
Iran's growing influence over Lebanon through the powerful armed
Hezbollah movement - which Tehran backs.
At Oriental Paper Products and businesses across Lebanon, the impact is
already being felt.
The company had been producing $500,000 worth of books and office
supplies destined for Saudi Arabia when the ban came into force.
"We already had our problems and now they (Lebanese politicians)
increased them. God help the Lebanese," Chief Executive Officer Ziad
Bekdache told Reuters.
The row comes at a particularly bad time for the Lebanese economy.
Industries had sought to leverage increased competitiveness due to the
currency's collapse to boost exports to Saudi Arabia from $240 million
in 2020 to $600 million, said Bekdache, also the deputy head of the
Association of Lebanese Industrialists.
"Now, it's zero," he said, noting several Lebanese companies had begun
moving factories to countries including Oman, Turkey and Cyprus to evade
the Saudi ban.
Non-food Lebanese exports to Saudi Arabia include aluminium, gold and
jewellery, machinery, soaps and paints.
"It's as if there is a plan to break the economic and industrial sectors
in Lebanon, in addition to cutting the ties and connections between
Lebanon and the world and especially the Gulf and Saudi Arabia,"
Bekdache said.
Lebanon's economy and industry ministers did not immediately respond to
a request for comment on the impact of the Saudi ban on exports. The
Center for Internatonal Communication, the Saudi government media
office, also did not immediately respond.
'WHY ARE WE PAYING THE PRICE?'
Lebanese businesses have been battered by one of the worst economic
crises in the country's history. That was compounded by the COVID-19
pandemic and a massive explosion at Beirut's port last year that wrecked
parts of the capital.
The Lebanese pound, tethered to the U.S. dollar for more than two
decades, has depreciated by more than 90% since 2019, slashing the
purchasing power of locals while the global shutdown drastically reduced
exports.
Then in April, Saudi Arabia blocked imports of Lebanese agricultural products
and food after a spike in drug smuggling that Saudi authorities said Lebanon had
failed to address.
[to top of second column] |
Ziad Bekdache, Chief Executive Officer of Oriental Paper Products
and deputy head of the Association of Lebanese Industrialists,
gestures and he speaks during an interview with Reuters in Fanar,
Lebanon November 1, 2021. Picture taken November 1, 2021.
REUTERS/Mohamed Azakir
Lebanon says it has taken measures to address the problem since then, including
several major drug busts.
Last week, Saudi Arabia and four other Gulf nations recalled their envoys to
Lebanon and the Saudi foreign minister said the kingdom saw no point in
re-engaging so long as Lebanon was dominated by Hezbollah.
Hezbollah have publicly backed Information Minister George Kordahi, whose
comments sparked the latest row and who is under pressure from some politicians
at home to step down.
This week, Lebanon's Foreign Minister Abdallah Bou Habib called the Saudi
demands impossible https://www.reuters.com/world/middle-east/lebanon-says-it-wants-dialogue-with-riyadh-not-demands-about-hezbollah-2021-11-02
to meet, and urged Riyadh to resume talks with the government to resolve
differences.
Lebanese business leaders have voiced growing frustration.
"Did we create Hezbollah? Do we have an arsenal of rockets? Why do we have to
pay the price?" the head of a Lebanese company with over $1 million in exports
to Saudi Arabia said, speaking on condition of anonymity due to the sensitivity
of the matter.
Some firms had been working to mend ties with Saudi Arabia when the new crisis
erupted.
Lebanese businessman Joe Rizk, supply chain manager at Second House Products
that makes spice blends and a variety of dry foods, met with the Saudi consul in
Beirut the day before Kordahi's comments.
"We were trying to solve it any way possible, but things got complicated again,"
Rizk said from a factory on the outskirts of Beirut.
Before the ban, 20% of his products went to 700 restaurants in Saudi Arabia,
Rizk said, and the company has been unable to find alternative buyers ahead of
the Islamic holy month of fasting Ramadan next spring, usually peak season for
them.
Now he says he is considering moving part of his production abroad, and worries
about potential lay-offs.
"We end up paying the price for these very big issues. They're tired of it and
we're tired of it," Rizk said, referring to Saudi and Lebanese people. "It's a
loss for both, not just for us."
(Reporting by Timour Azhari; Editing by Mike Collett-White)
[© 2021 Thomson Reuters. All rights
reserved.] Copyright 2021 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |